PSU Banks loan disbursal picked up in September.

Loan disbursal has increased from 3% in March 2020 to 4.6% in September 2021 for PSU banks. This is great sign for the sector that is coming out of pandemic situation. Credit bureau study indicates that the share of personal loans for PSU banks rose from 8% in March 2020 to 26% in August 2020. The situation is getting far better with the opening of the economy.

 

How the PSU banking sector has performed?

From last 5 years, the sector is under tremendous pressure due to rising NPA issue and rising frauds by many entrepreneurs. Also Government policy to meet fiscal expenditure by selling its stake always put pressure on the stock prices of these PSU banks.

RBI is now taking lot of steps to improve the financial position of these banks. This means that in long run these banks have great future and also with the opening of the economy the lending of these banks to various sectors will improve further. This will add revenue for these banks and also lead to improvement of NPA situation for these banks.

 

How to trade in PSU Banking sector?

The best way to trade in PSU banking sector is through Nippon India PSU Bank Bees ETF. This option is available in stock trading account through dmat (click here to open Dmat account). 

Benefit of trading through Nippon India PSU Bank Bees ETF

  •  You can take exposure in most of PSU banks in one go by simply purchasing ETF.
  •  ETF is trading in real time during market hour giving you an opportunity to buy at different prices at different timeframes. This means that you can average if ETF price falls.
  • The most important benefit is diversification across the PSU banking pack and result in better risk management.   

Technique to enter PSU banking ETF

  1. Our recommendation is to enter in the sector systematically with 25% of decided amount and need to do average at each 5% fall. This will result in getting better price.
  2. The horizon for investment to take the benefit should be at least 6 months to one year.